Credit Repair Services
COVID-19 brought about a silver lining for consumers as it curtailed our credit card spending, but as we emerged from the pandemic, we embarked on a debt accumulation spree, pushing the balances on credit cards and other revolving credit products well beyond the $1 trillion mark.
When consumers find themselves in credit trouble, they tend to follow one of two paths. Some opt to hunker down and meticulously chip away at their financial woes, piece by piece. Others, however, choose the alternative route of enlisting the services of a credit repair company to shoulder the burden and restore financial normalcy.
According to the Consumer Financial Protection Bureau (CFPB), consumers who opt for the credit repair route should be fully aware of their rights. The foremost right in this context is the entitlement to witness tangible results before parting with any payment. The CFPB strongly advises consumers to resist the allure of promises made by credit repair services, regardless of the desperation they might be feeling. The agency underscores that individuals seeking to improve their credit situations can often find themselves ensnared by unscrupulous companies that sell the dream of credit repair, only to charge exorbitant fees without delivering on their commitments. Federal law, as delineated by the CFPB, mandates that companies offering credit repair services via telemarketing must meet specific prerequisites before they can charge fees. These prerequisites entail achieving the promised results within the specified timeframe and furnishing a consumer report displaying these results, generated more than six months after the claimed achievements. Only after these conditions are met can the company legitimately charge fees or accept payments.
Credit repair, however, is not always the necessary path to financial recovery. Ashley Eneriz, Senior Finance Writer at ConsumerAffairs, suggests that although many credit repair companies offer free credit counseling, they frequently advocate enrollment in a paid debt management program as the route to enhancing credit and financial stability. Eneriz acknowledges the potential benefits of such programs but cautions that they can be time-consuming, spanning 12 to 36 months and accruing monthly fees. The key consideration lies in assessing whether the cost of credit repair justifies the associated benefits. For many individuals, self-directed credit repair through increased payments towards revolving credit debts, such as credit cards, proves effective. Establishing a history of punctual payments and diligently addressing debt emerges as the primary method to elevate one's credit score, although it is not a swift remedy. Significant improvements may take over a year to materialize for some individuals.
